Major banks are spotting opportunities and getting back into the business of making jumbo loans.

Bank of America, the country’s largest mortgage lender since it acquired Countrywide, has renamed its lending arm Banking of America Home Loans and is rolling out a program to finance loans between $730,000 and $1.5 million.

“There’s a real need for loans of this size,” says Barbara Desire, who heads consumer real estate operations.

Other lenders moving into this space include ING Group, Amsterdam-based banking and insurance conglomerate, which will offer jumbos as large as $2 million through ING Direct.

Source: Washington Post Writers Group, Kenneth R. Harney (03/21/2009)

The housing market is looking healthier. Here are six reasons why now is the time to jump into the market.

1. Uncle Sam is willing to help. First-time buyers (defined as anyone who hasn’t owned a home in the last three years) are entitled to a maximum $8,000 tax credit; interest rates are at record lows; and the Federal Reserve is doing its best to make mortgage loans available. (Sign up for a Webinar to learn more about the home buyer tax credit)

2. People have to live somewhere. About 800,000 new households are formed each year in this country, ensuring that the housing market will tighten, even if the economy doesn’t soar.

3. Borrowers leverage their investment. If you put $10,000 into the stock market and it earns 10 percent, you’ve earned $1,000. If you put $10,000 down on a home and its values increases 10 percent, you’ve made $10,000.

4. When prices come back up, you’ll have instant equity. In parts of the country where foreclosures have driven down prices, better times will mean the price of the home you buy will rise rapidly.

5. Mortgage costs stay the same. If you get a fixed-rate mortgage, the monthly payment stays the same – while everything else, including rent, goes upward.

6. You own it. There is something comforting in the notion that your home is your own. You can paint it any color you want, let the dog run in the back yard and hang a swing for the kids in the front.

Source: The Wall Street Journal, June Fletcher (03/27/2009)

Some California lawmakers are urging the state to move the 5,300 inmates housed on prime waterfront property belonging to the San Quentin State Prison and sell the land with its stunning views of San Francisco Bay for development.

San Quentin was built originally in 1852. It houses the state’s male death-row inmates and the state’s gas chamber. The complex has 200 buildings and 90 homes for employees. The area is remote and, consequently, very secure.

Supporters of the idea envision a waterfront village with luxury condos and high-end single family homes in its place. The community would be connected to San Francisco and other parts of the bay area by a ferry.

Stephen Roulac, a real-estate consultant and member of a Marin County committee that studied the idea, estimated the property’s value at $2 billion. “Selling that land would not only provide a tremendous boon to Marin County, it would also act as a stimulus to much of Northern California,” he said.

Source: The Wall Street Journal, Bobby White (03/18/2009)

With approximately 81,000 properties in California receiving a foreclosure filing in February, and one in five homeowners underwater nationwide, many consumers are seeking mortgage modifications, but may not understand how they work.

A loan modification is generally a temporary adjustment to a home loan that lowers the monthly payments by reducing the interest rate the borrower pays. In most cases, borrowers are eligible for loan modifications if they can prove their troubled mortgages can be brought back to good standing with the modification.

Consumers interested in learning more about loan modifications should contact a mortgage counselor at an agency certified by the U.S. Dept. of Housing and Urban Development (HUD). A list of agencies can be found online at www.hud.gov.

Read the full story from the LA Times

If you want to make sure the house you buy this year is a smart financial move, follow these quick tips:

1. Get preapproved for your loan before house hunting. To get preapproved a lender has to check your credit history and FICA score. Once you’ve been preapproved, check with several lenders to see who has the best rates before putting in an application.

2. Once you know what you can afford, plan on a timeline of being in a house for 5 -10 years and choose a neighborhood you’ll be able to stay in. If children are a part of the picture make sure you choose a home in a good school district. This will help with resale down the road when you want to sell to another up and coming family. If you stay in for 10 years you’ll be able to ride out any downturn in the economy and you’ll probably make money and have equity in the house.

3. Buy what you need and try to avoid the flash. You can always upgrade the house on your own schedule and add value that way.

4. Remember the rainy day fund. There will always be something in the house that needs fixing. From a new roof to dishwasher, things always break so make sure you have cash in the bank.

Many mortgage professionals are advising clients not to wait to refinance. Stricter loan underwriting standards and declining property values could result in some homeowners becoming ineligible for the Obama administration’s “Making Home Affordable Refinance” program. As a result, many mortgage professionals are advising clients not to wait to refinance. Read the article from The New York Times.

Details of $75-billion housing plan unveiled.
President Obama unveiled details of his plan to stabilize the housing market, which could help up to 9 million homeowners refinance or modify their mortgages.

The plan has two main components, one for helping homeowners whose homes have lost value and have little or no equity to refinance, the second to help struggling borrowers by providing government incentives to lenders to lower mortgage payments to 31 percent of a borrower’s monthly gross income.

To read the full story, please click here

To view additional articles about mortgages, which also may be of interest to clients in the market for a new home loan, please visit the following:

Citigroup to cut mortgage payments for some unemployed customers
To read the full story, please click here

Speier plan would aid refinancing in Bay Area
To read the full story, please click here

FHA to raise loan limits in some areas
To read the full story, please click here

Home buyers in California can enjoy up to $18,000 in tax credits
To read the full story, please click here

U.S. mortgage demand off before Obama rescue details
To read the full story, please click here

Report puts 20% of mortgages underwater
To read the full story, please click here

The weak housing market has prompted some home sellers to offer rent-to-buy agreements to prospective buyers.

These buyers pay an up-front fee of approximately 1 percent of the sales price for the option to buy, and all the payments they make during the rental period go toward the principal.

Most rent-to-buy agreements last for two to five years; and if the occupants decide not to go through with the purchase, they lose the option fee plus the rental payments. Those that agree to purchase the home at the price specified when the agreement was signed also lose money if property prices have since fallen.

Moreover, buyers who make late rental payments often find that these do not count toward the home purchase. According to Arizona State University finance professor Anthony Sanders, “A good rule of thumb [is to] separate the rental decision from the purchase decision.”

Source: Forbes 03/02/09

Dear Mr. Fisher:

Thank you for contacting me to express your support for including housing market reforms and foreclosure prevention measures in the recently enacted economic recovery bill. I certainly appreciate hearing your suggestions and would like to share with you what was included in the final version of this legislation.

Like you, I am extremely concerned about this severe economic crisis, which has been caused in part by the declining housing market. Last year, there were 837,665 foreclosures filed in California alone, an increase of more than 100 percent over 2007.

As you know, on February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 (H.R. 1) into law. This important legislation represents a significant investment by the Federal Government in an effort to create jobs and improve our Nation’s aging infrastructure. The bill also makes a major commitment to stabilizing the housing market and assisting hardworking Americans. Specifically, the bill will:

Allow first-time homebuyers to receive a tax credit worth up to $8,000 for homes purchased after January 1, 2009. Recipients of this credit will not have to repay it.

Provide the Public Housing Capital Fund with $4 billion to help local public housing agencies address a $32 billion backlog in capital needs.

Provide the HOME Investment fund with $2.25 billion for state and local governments to acquire, construct, and rehabilitate affordable housing.

Invest $2 billion in the Neighborhood Stabilization Program to allow state and local governments to purchase and rehabilitate foreclosed properties to reduce blight in communities.

You may be interested to learn that I joined Senator Mel Martinez (R-FL) in introducing an amendment to the Senate-version of the American Recovery and Reinvestment Act of 2009 that would have extended the $729,750 maximum conforming loan limits through 2010. However, this amendment was not included in the final version of the bill passed by the Senate.

It is critical that Congress work with the new Administration to restore the American dream of home ownership and this bill is part of that effort. Please know that I will keep your comments and suggestions in mind should further legislation to address our country’s housing crisis come before the Senate.

Once again, thank you for writing. If you have any additional questions or concerns, please do not hesitate to contact my Washington, D.C. office at (202) 224-3841. Best regards.

Sincerely yours,
Dianne Feinstein
United States Senator